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The aluminium futures contract on the Multi Commodity Exchange (MCX) has declined, breaking below the crucial ₹133-₹134 per kg support zone last week. The contract was hovering above this support for most part of the week. It made a high of ₹135.9 per kg on Thursday and reversed sharply lower from there, breaking below the ₹133-₹134 support zone. It is currently trading at ₹132 per kg.
Downtrend strengthens
The outlook bearish for the MCX-Aluminium futures contract. The fall in the past week has also strengthened the downtrend that has been in place since mid-February.
The region around ₹134 will now act as a strong resistance in the coming days. An intermediate bounce to this level may find fresh sellers coming into the market. A fall to ₹130 or ₹129 is likely in the near term. A break below ₹129 will then increase the likelihood of the fall extending towards ₹127 or even to ₹125 in the short term.
The downside pressure will ease only if the contract breaches resistance at ₹134 decisively. Such a break may trigger a relief rally to ₹137 or even higher thereafter. However, such a strong bounce-back move looks unlikely at the moment.
Trading strategy
Short-term traders can go short on rallies at ₹133. Stop-loss can be placed at ₹135 for the target of ₹129. Revise the stop-loss lower to ₹132 as soon as the contract moves down to ₹131.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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